COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-09-104-CV
THE PROFITLIVE PARTNERSHIP APPELLANTS
AND PROFITLIVE, INC.
V.
CHERYL M. SURBER AND APPELLEES
JOHNSON PROPERTY INVESTMENTS, INC.
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FROM THE 17TH DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION 1
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I. Introduction
Appellants The Profitlive Partnership and Profitlive, Inc. (collectively, Profitlive)
appeal the trial court’s summary judgment for appellees Cheryl M. Surber and
Johnson Property Investments, Inc. (JPI) on their claims of common law fraud and
conspiracy. W e affirm in part and reverse and remand in part.
1
See Tex. R. App. P. 47.4.
II. Factual and Procedural Background
Profitlive operated Creative Real Estate Workshops (CREW) in the Dallas-Fort
W orth area. In May 2001, after listening to a radio broadcast, attending several
CREW workshops, and meeting with Profitlive’s president, Dan Franklin, Surber
invested $100,000 on behalf of JPI in exchange for a 10% ownership interest in
Profitlive. Four months later, Profitlive was no longer operating, and JPI had realized
only a dismal return on its investment. Surber and JPI sued Profitlive for common
law fraud and conspiracy.
During the discovery period, Surber and JPI served requests for admissions
on Profitlive. Profitlive did not respond to the requests for admissions; consequently,
pursuant to Texas Rule of Civil Procedure 198.2(c), the requests were deemed
admitted by Profitlive. 2 Thereafter, Surber and JPI jointly filed a motion for summary
judgment supported primarily by the deemed admissions and affidavit testimony by
Surber. Profitlive did not respond to the motion. The trial court granted Surber and
JPI’s motion and rendered summary judgment awarding them nearly $700,000 in
actual and exemplary damages with interest.
Profitlive appealed to this court. See Profitlive P’ship v. Surber (Profitlive I),
248 S.W .3d 259 (Tex. App.—Fort W orth 2007, no pet.). W e held that the summary
2
See Tex. R. Civ. P. 198.2(a) (providing that a party must respond to
requests for admissions within thirty days); see also Tex. R. Civ. P. 198.2(c) (“If a
response is not timely served, the request is considered admitted without the
necessity of a court order.”).
2
judgment evidence presented by Surber and JPI raised a material issue of fact
regarding the amount of damages they suffered as a result of Profitlive’s conduct.
Id. at 261–62. Accordingly, we reversed the entire summary judgment and
remanded the case for a new trial on both liability and damages. Id. at 262.
On remand, Surber and JPI jointly filed an amended motion for summary
judgment. This motion was supported by the same deemed admissions that they
relied upon in their earlier motion, as well as a new Surber affidavit, affidavits by two
additional witnesses, portions of three depositions, and other summary judgment
evidence. In their amended motion, Surber and JPI argued that the summary
judgment evidence presented no material issue of fact and that they are entitled to
judgment as a matter of law on their common law fraud and civil conspiracy claims.
JPI sought $1,385,127.92 in actual damages and $200,000 in exemplary damages,
plus interest. Surber sought $250,000 in actual damages, plus interest.
Profitlive opposed summary judgment and moved to strike the deemed
admissions. Surber and JPI stated in their reply to Profitlive’s response that
Profitlive, Inc. had forfeited its charter and was “ineligible to appear and defend in
this case.” After a hearing, 3 the trial court denied Profitlive’s motion to strike the
deemed admissions and granted final judgment on Surber and JPI’s amended
summary judgment motion. In its final judgment, the court found that Profitlive
Partnership and Profitlive, Inc. “are without standing to appear to defend in the
3
No record of the hearing is before us.
3
instant action and that the Motion for Summary Judgment should be, and hereby is,
granted” and awarded Surber and JPI the damages requested in their amended
motion.
Profitlive filed a motion for new trial challenging the trial court’s summary
judgment. Profitlive did not separately challenge the trial court’s order denying its
motion to strike deemed admissions. Surber and JPI opposed Profitlive’s motion for
new trial and jointly moved to enforce a 2003 trial court order sanctioning Profitlive
in the amount of $8,999.21 for earlier discovery abuses. The trial court denied
Profitlive’s motion for new trial and did not rule on Surber and JPI’s motion to enforce
sanctions. Profitlive appeals from the trial court’s summary judgment on Surber and
JPI’s common law fraud and civil conspiracy claims.
III. Summary Judgment
In two issues, Profitlive argues that the trial court erred by granting summary
judgment against it based on the lapse of Profitlive, Inc.’s corporate charter and
because Surber’s affidavit is insufficient as a matter of law as to any damages.
A. Standard of Review
W e review a summary judgment de novo. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W .3d 844, 848 (Tex. 2009). W e consider the
evidence presented in the light most favorable to the nonmovant, crediting evidence
favorable to the nonmovant if reasonable jurors could, and disregarding evidence
contrary to the nonmovant unless reasonable jurors could not. Id. W e indulge every
4
reasonable inference and resolve any doubts in the nonmovant’s favor. 20801, Inc.
v. Parker, 249 S.W .3d 392, 399 (Tex. 2008). A plaintiff is entitled to summary
judgment on a cause of action if it conclusively proves all essential elements of the
claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W .2d 59, 60
(Tex. 1986).
B. Standing
In its first issue, Profitlive challenges the trial court’s order granting summary
judgment on the basis that the order rests on the trial court’s erroneous finding that
it was without standing to appear and defend in this case. Profitlive specifically
argues that the finding that it lacked standing is not supported by the record. Surber
and JPI respond that, although Profitlive challenges summary judgment based on
lack of standing, the judgment itself rested on other grounds presented in the motion
that Profitlive does not challenge—that there is no genuine issue of material fact as
to Profitlive’s liability and that Surber and JPI are entitled to judgment as a matter of
law.
The trial court’s final judgment reads:
The Court heard arguments, and was presented by both parties with
legal citations, as well as the pertinent portions of the record, to include,
inter alia, Requests for Admissions and the absence of responses to
those Requests. The Court was also presented with affidavits in
support of the Motion, and the arguments of both parties, as set forth
in their written submissions. The Court was also presented with
records of the Texas Office of the Secretary of State, reflecting that the
corporate charter of ProfitLive [sic], Inc. has been allowed to lapse, and
no action has been taken to reinstate that Charter.
5
Having heard the arguments of counsel, and having considered
the authorities presented by both sides, the Court does hereby find and
conclude that Defendants [Profitlive, Inc. and The Profitlive Partnership]
are without standing to appear to defend in the instant action and that
the Motion for Summary Judgment should be, and hereby is, granted.
[Emphasis added.]
Based upon a plain reading, the trial court’s final judgment does not rest solely on
the ground that Profitlive lacks standing. Although the judgment states that the
Profitlive defendants “are without standing,” it also states that summary judgment
“should be, and hereby is, granted” without specifying the grounds upon which
judgment rests.
W hen the trial court’s judgment rests upon more than one independent ground
or defense, the aggrieved party must assign error to each ground, or the judgment
will be affirmed on the ground to which no complaint is made. Scott v. Galusha, 890
S.W .2d 945, 948 (Tex. App.—Fort W orth 1994, writ denied). Looking to the theories
presented to the trial court by Surber and JPI, the principal argument they advance
in their amended motion is that the summary judgment evidence establishes that no
material issue of fact exists and that they are entitled to judgment as a matter of law.
Profitlive fails to assign error based on this ground, even though it is the principal
ground on which Surber and JPI moved for summary judgment. W e will, therefore,
affirm the summary judgment based on the ground to which Profitlive failed to assign
error.4 See id.; see also Pat Baker Co., Inc. v. Wilson, 971 S.W .2d 447, 450 (Tex.
4
We note that these two conclusions appear to be mutually exclusive, i.e.,
if Profitlive lacked standing, then there could be no judgment. But because the trial
court granted summary judgment in addition to finding no standing, even if
6
1998) (“It is axiomatic that an appellate court cannot reverse a trial court’s judgment
absent properly assigned error.”); Torres v. Johnson, 91 S.W .3d 905, 908 n.3 (Tex.
App.—Fort W orth 2002, no pet.) (affirming summary judgment on unchallenged
ground); King v. Tex. Employers’ Ins. Ass’n, 716 S.W .2d 181, 182–83 (Tex.
App.—Fort W orth 1986, no writ) (affirming summary judgment “because summary
judgment may have been granted, properly or improperly,” on the ground set out in
the motion, and the appellant did not challenge that ground). W e overrule Profitlive’s
first issue.5
erroneously, Profitlive was required to challenge the other ground in the motion for
summary judgment.
5
Furthermore, we note that although tax code section 171.251 provides that
a corporation forfeits its corporate privileges if it fails to pay its franchise tax and
section 171.252 provides that “[i]f the corporate privileges of a corporation are
forfeited . . . the corporation shall be denied the right to sue or defend in a court of
this state,” courts have historically limited section 171.252 to prohibit defendants
from bringing cross actions, not from merely defending lawsuits. See Tex. Tax
Code. Ann. §§ 171.251–.252 (Vernon 2008); see also Midwest Mech. Contractors,
Inc. v. Commonwealth Constr. Co., 801 F.2d 748, 752 (5th Cir. 1986); Anoco Marine
Indus., Inc. v. Patton Prod. Corp., No. 02-08-00073-CV, 2008 W L 4052927, at *2 n.4
(Tex. App.—Fort W orth Aug. 29, 2008, no pet.) (mem. op.); Bryan v. Cleveland Sand
& Gravel Co., 139 S.W .2d 612, 613 (Tex. Civ. App.—Beaumont 1940, writ ref’d).
Nothing in sections 171.251 or 171.252 purports explicitly to reduce the power of a
Texas court over any person, thing, or cause of action that falls within the court’s
jurisdiction absent that statute. See, e.g., Flameout Design & Fabrication, Inc. v.
Pennzoil Caspian Corp., 994 S.W .2d 830, 838–39 (Tex. App.—Houston [1st Dist.]
1999, no pet.) (stating that the purpose of section 171.251 is to enforce collection of
state franchise taxes, not to prohibit a corporate cause of action); Hardwick v. Austin
Gallery of Oriental Rugs, Inc., 779 S.W .2d 438, 441 (Tex. App.—Austin 1989, writ
denied) (noting that “[i]f the statute deprived the court of jurisdiction to hear and
determine the case, then the court would be powerless to render judgment against
a corporation whose corporate privileges had been forfeited by the Comptroller”),
superseded on other grounds by statute as stated in Bair Chase Prop. Co., L.L.C.
v. S & K Dev. Co., 260 S.W .3d 133 (Tex. App.—Austin 2008, pet. denied); see also
7
C. Surber’s Affidavit
In its second issue, Profitlive argues Surber’s affidavit was insufficient as a
matter of law to support damages because, among other things, it fails to lay any
predicate as to how Surber’s common law fraud and civil conspiracy claims would
support an award of lost wages or how Surber’s education, work history, or other
evidence supports Surber’s claimed value of her time.
Surber and JPI’s motion for summary judgment seeks judgment as a matter
of law on their common law fraud and civil conspiracy claims. 6 Their motion seeks
an award of actual damages to Surber based solely upon her “lost time and earnings
during the within litigation, which totals in excess of $250,000.” In support of her
claimed “lost time and earnings,” Surber submits affidavit testimony in which she
states what she “would have been able to earn as a consultant or in other like
employment, as a result of [her] M.B.A. degree, . . . but for the necessity of devoting
[her] time and attention to pursuing [her] rights and those of [JPI].” Surber estimates
the value of her time to be $50 per hour based on her experience, states that she
has spent in excess of 5,000 hours “investigating and pursuing this case,” and states
Cruse v. O’Quinn, 273 S.W .3d 766, 770–71 (Tex. App.—Houston [14th Dist.] 2008,
pet. denied) (citing Vanscot Concrete Co. v. Bailey, 853 S.W .2d 525, 526–27 (Tex.
1993), for the proposition that a corporation that had ceased to exist could still
appeal a trial court’s judgment against it). During the pendency of this appeal,
Surber and JPI filed a motion to supplement their brief to elaborate on standing—in
light of our discussion above, we deny that motion.
6
W e have supplemented the appellate record to include Surber and JPI’s
live pleading against Profitlive, and the pleading shows that these are the only two
claims they bring against Profitlive.
8
that this litigation has prevented her from obtaining employment in which she would
have earned $250,000. The trial court entered judgment for Surber in the amount
of $250,000 for actual damages “as set forth in the Motion” for summary judgment.
Surber’s claimed actual damages “in the form of lost time and earnings during
the within litigation” are based upon her claimed financial loss due to the time she
spent on litigation matters instead of income-producing activities. Accordingly, these
damages are a category of litigation expenses. But litigation expenses, including the
value of time lost due to litigation, generally are not recoverable unless expressly
provided by statute or contract or recoverable under equitable principles. See
Eberts v. Businesspeople Pers. Servs., Inc., 620 S.W .2d 861, 863 (Tex. Civ.
App.—Dallas 1981, no writ) (holding lost earnings due to time spent on litigation by
plaintiff’s president and other employees are not recoverable); Shenandoah Assocs.
v. J & K Props., Inc., 741 S.W .2d 470, 486–87 (Tex. App.—Dallas 1987, writ denied)
(holding expenses of litigation, including “litigant’s loss of time and that of his
employees,” not recoverable as costs or damages); see also Beasley v. Peters, 870
S.W .2d 191, 196 (Tex. App.—Amarillo 1994, no writ) (“[I]t is settled that time lost
[due to litigation] is an expense of litigation for which recovery is not allowed.”);
Brandtjen & Kluge v. Manney, 238 S.W .2d 609, 612 (Tex. Civ. App.—Fort W orth
1951, writ ref’d n.r.e.) (“The general policy of the Texas law appears to be that
parties to a suit are not allowed recovery, either as costs of suit or as damages, for
expenses incurred in prosecuting or defending the suit, such as attorney’s fees,
9
traveling expenses, etc., unless recovery for such items is expressly provided for by
statute, or is recoverable under usages of equity.”).
Surber has failed to identify any statute or contract that provides for the
recovery of the value of her lost time and earnings as damages on her common law
fraud and civil conspiracy claims. Accordingly, we hold that neither the affidavit nor
her other summary judgment evidence supports the trial court’s actual damages
award of $250,000 to Surber.
To be entitled to summary judgment, Surber was required to establish each
element of her causes of action as a matter of law. See Profitlive I, 248 S.W .3d at
260–61. The elements of common law fraud are (1) a material representation, (2)
that is false, (3) which was either known to be false when made or was made
recklessly without knowledge of its truth, (4) with the intent that the representation
be relied upon, (5) that it was relied upon, and (6) which caused injury. Johnson &
Johnson Med., Inc. v. Sanchez, 924 S.W .2d 925, 929–30 (Tex. 1996); Malone v.
Sewell, 168 S.W .3d 243, 252 (Tex. App.—Fort W orth 2005, pet. denied). The
elements of civil conspiracy are: (1) two or more persons, (2) an object to be
accomplished, (3) a meeting of the minds on the object or course of action, (4) one
or more unlawful, overt acts, and (5) damages as a proximate result. Tri v. J.T.T.,
162 S.W .3d 552, 556 (Tex. 2005). Because we have held that summary judgment
evidence does not support Surber’s damages, Surber has failed to conclusively
establish that she is entitled to summary judgment on all essential elements of her
10
causes of action. See, e.g., Profitlive I, 248 S.W .3d at 262. Accordingly, we sustain
this portion of Profitlive’s second issue, and we must reverse this portion of the trial
court’s judgment. 7 See MMP, Ltd., 710 S.W .2d at 60.
IV. Conclusion
Having overruled Profitlive’s first issue, we affirm the portion of the judgment
granting summary judgment on JPI’s claims. Having sustained the portion of
Profitlive’s second issue challenging Surber’s damages award, we reverse the
portion of the judgment granting summary judgment on Surber’s claims and remand
the cause to the trial court for a new trial on those claims. 8
BOB MCCOY
JUSTICE
PANEL: DAUPHINOT, W ALKER, and MCCOY, JJ.
DELIVERED: May 20, 2010
7
Based on our resolution, we need not address Profitlive’s remaining
arguments under this issue. See Tex. R. App. P. 47.1. W e note that although
Profitlive mentions that Surber and JPI relied on “the same deemed, merits-
preclusive admissions” for the remaining damages, it has provided no briefing on this
issue. See Weaver v. Sw. Nat’l Bank, 813 S.W .2d 481, 482 (Tex. 1991); see also
Tex. R. App. P. 38.1(f), (i).
8
Surber and JPI separately move that we dismiss this appeal or, in the
alternative, compel Profitlive to pay sanctions as a condition to appeal based upon
conduct by Profitlive that Surber and JPI characterize as contumacious, including
Profitlive’s past discovery abuses and failure to comply with the trial court’s earlier
sanctions orders. W e deny this motion without comment on the merits of imposition
or enforcement of sanctions by the trial court.
11